The Performance Bond is a guarantee by means of which the
purchaser or the owner secure the risk of the default of the
counter-party (the supplier or the contractor). In case of default,
the purchaser will obtain a sort of indemnity from the subject who
issued the bond (usually a bank, called also the
'guarantor').
Let's see first how a Performance Bond works in practice.
In an international sales contract, the purchaser (for
example, an English company) undertakes to purchase a certain
quantity of goods to be manufactured and supplied by a supplier
(for example, an Italian company). The purchaser will ask the
supplier to have a performance bond issued by a bank, i.e. a
guarantee of good performance of the contract, so that, in case of
the supplier's default, the purchaser, instead of starting a
long and costly dispute to obtain the compensation for the suffered
damages, will obtain a prompt payment from the guarantor without
the need to prove the actual default of
